…over $8B owed to UG Student Loan Agency

By Svetlana Marshall

MERELY $679.9M of the $9.4B pumped into the University of Guyana Student Loan Agency have been repaid. And of the 25,000-plus beneficiaries of this facility, merely seven per cent have repaid their loans.

The foregoing has been revealed in the report of a forensic audit done on the Student Loan Agency for the period December 2011 to May 2015. This audit was done by R. Seebarran and Co, Chartered Accountants, on the instructions of Finance Minister Winston Jordan. However, information and data have been included for an earlier period to allow for a better understanding of the operations of the agency from its inception to present time.

According to the report submitted to Minister Jordan, from 1994 to May 2015, the Government of Guyana, through the National Budget, approved $9,489,453,973 or US$45.5M, using the current rate of exchange of G$210 to US$1.

However, during the period April 2011 to December 2014, $1.8B or US$8.5M were received by the agency.

Loans issued during the audited period (academic years 2011-2012 to 2014-2015) amounted to approximately $1.5B, of which $1.4B were issued to students at Turkeyen Campus and $148.7M were issued to students at the Tain Campus.

Up to the end of December 2014, 25,335 students had obtained loans to a total value of $9,159,644,463.

“Of the total number of students who have received loans (25,335), 4,713 or 18.6% are recent graduates or are still students; 1,776 or 7% have repaid their loans, totalling $679,918,794 including principal and interest,” the auditors pointed out.

Five students had their loans written off, while 1,278 of students, or 5 per cent, have been paying, but not all are up-to-date, the auditors stated. In fact, 17,56l, or 69.4% of the loan portfolios, are deemed delinquent because students have not been honouring their indebtedness.

“This is a clear indication that the Ministry of Finance — and by extension the Agency — has not pursued the defaulters with a view to recover their indebtedness,” the auditors have said.

Rawle Sue-Hu, who has been managing the Student Loan Agency for more than 15 years, informed the auditors that his department is not equipped to pursue defaulters. Sue-Hu reportedly made it clear that the agency was never instructed to operate the Student Loan Fund as a revolving fund, and he laid the responsibility at the feet of the Finance Ministry.

“Mr. Sue-Ho explained that because the contracts are between the Government and the students, and the fact that the Agency was never set up to recover the loans, students have not been honouring their contractual obligations to repay the loans in accordance with their contracts,” the auditors stated.

According to Sue-Hu, several attempts were made to have the Ministry, and by extension the Government, to address this problem, but to no avail.

On the other hand, in excess of $12M are repaid monthly through deduction orders, the vast majority of which were implemented after action was taken by the Agency.

“We have verified that the Agency has made some attempts to recover outstanding amounts through occasional letters of reminder; and whenever the students have cause to visit the Agency, they are encouraged to settle their liabilities,” the auditors stated.

Recommendations
Considering the prevailing problems facing the Student Loan Agency, the auditors have recommended that the student loans be managed as “Student Revolving Loans” with immediate effect.

“This will allow outstanding loans to be collected and used for future loans without the Government having to provide additional amounts,” the auditors explained.

According to the auditors, “There is no need for the Government to budget for any further funds for the Agency,” given the current bank balances and outstanding payments.

The Finance Ministry has also been advised to have formal letters sent to students, reminding them of their obligation to repay their loans. Failing which, legal proceeding should be instituted, the auditors recommended.

“Where students cannot be located, or have failed to respond to written and oral communication, the guarantors should be pursued. (Additionally), the Ministry of Finance should include on its website a page referred to as the ‘Student Loan Agency’, and include the names of the defaulters.”

This recommendation is among other recommendations made to the Ministry of Finance to be implemented by the Loan Agency.

The Student Loan Agency was established in 1995 to manage the Student Loan Account, and not a Student Revolving Fund Account. Currently, the agency falls under the direct supervision of the Finance Secretary, but its day to day affairs are managed by Sue-Hu, who is currently supported by nine full time staff members. However, there is at the Tain Campus one staff member who provides support throughout the year.